Diesel fuel (DF) quotes have paused since the beginning of the week, with summer grades decreasing by 5%, while winter diesel fluctuates up and down, remaining close to the historical maximum of October 6 (78,654 rubles per ton). Currently, it is trading at 77,654 rubles per ton.
The behavior of the quotes can be explained, on one hand, by the traditional seasonal drop in fuel demand in late autumn, with the transition from summer to winter grades affecting diesel prices. On the other hand, the elimination of subsidies for oil producers when supplying fuel to the domestic market (the dampener) for August and September has significantly increased the costs for oil refineries (ORPs), which can only be compensated by maintaining high wholesale prices.
Retail prices show no sign of stabilization yet. According to Rosstat, over two weeks from September 30 to October 13, gasoline prices increased by an average of 1.8%, while diesel prices rose by 0.7%. The Moscow Fuel Association has already published statistics for the last week in the capital, indicating that gas station prices have continued to rise, with diesel experiencing a price increase faster than AI-92 and AI-95 gasoline.
The primary issue facing our fuel market, according to experts, remains the forced stoppages of ORP capacities due to drone attacks against the backdrop of a high fiscal burden on the industry. Exporting crude oil is currently more profitable than refining and selling it domestically as fuel. This is precisely why the complete ban on gasoline exports (in effect since August 1) and the partial ban (for traders) on diesel exports (effective since October 1) have not significantly cooled the market, and the quotes have not gone down.
The decree prohibiting the elimination of subsidies for oil producers when supplying fuel to the domestic market (the dampener) since October 1 until May 1 next year has increased the attractiveness of oil refining, but has not had a depressing effect on prices. On the contrary, ORPs can now raise prices without the risk of losing budget payments. Ideally, after offsetting losses from August and September, they will stop maintaining prices when an opportunity to increase supply arises.
Against this background, several media outlets, citing sources from a meeting on the fuel market with Deputy Prime Minister Alexander Novak, reported that the government is considering additional measures to impact the fuel market. It is proposed to require oil producers to send at least 40% of the extracted oil for refining, allocate a separate trading session on the exchange for end fuel consumers (limiting the opportunities for fuel resale), and start taking into account sales of small wholesale batches of fuel delivered by road (which are typically more expensive) during trading.
The Ministry of Energy did not respond to a request from "RG." According to Yuri Stankevich, Deputy Chairman of the State Duma Energy Committee, any item on the agenda of the oil product task force should not be viewed as an imperative that will be necessarily reflected in government decisions.
Regarding the potential government measures mentioned, the deputy noted that setting the refining threshold at 40% of extraction volumes is significantly below the already existing status quo. In 2024, over 51% of extracted oil (266 out of 516 million tons) was refined at domestic ORPs, and this figure is expected to grow.
Changes in trading rules on the exchange are primarily aimed at eliminating speculators who play on price increases. From this standpoint, there may be options for end consumers to participate in trading, introducing licensing, and other proposals, the deputy clarifies.
As noted by Sergey Frolov, managing partner of NEFT Research, regarding the standard for supplying 40% of extracted oil for refining, it is still unclear what this entails. Companies with their own ORPs are already operating their capacities at maximum potential. What is proposed for those without such capacities (e.g., Surgutneftegaz, Tatneft) - to build new ORPs? This is simply unrealistic under current conditions.
From the perspective of Sergey Tereshkin, CEO of the OPEN OIL MARKET fuel marketplace, it is currently difficult to assert that 40% of extracted oil will be refined. There is a lack of open data on the volume of primary oil processing, but several indicators suggest that this figure is decreasing, he explains. According to S&P Global Platts, maritime exports of oil products from Russia in September (1.87 million barrels per day) reached their lowest level in three and a half years.
Regarding the reform of exchange trading, the expert believes that attempts to detail delivery conditions will not yield significant results. The standard for diesel sales on the exchange is only 16% (of the monthly fuel production volume), and for gasoline, it is 15%, meaning that exchange trading does not encompass the entire market. It would be more effective to simply increase the supply standard for the exchange, especially since this measure is easier to administer than specifying delivery conditions for fuel, he argues.
A similar view is held by Dmitry Gusev, Deputy Chairman of the "Reliable Partner" Association's supervisory board and a member of the expert council of the "Gas Stations of Russia" competition, who points out that the methodology for defining "end consumers" is completely unclear and will inevitably complicate the normal operation of the market.
Another important nuance is related to the tax system established in our oil industry. As Dmitry Gusev notes, after completing the tax maneuver (increasing the mineral extraction tax - MET on oil and reducing the export duty on oil, gasoline, and diesel to zero), oil companies have an obligation to sell a portion of their oil products on the exchange. However, if refining is not profitable, there was nothing preventing them from reducing these volumes. Instead of stimulating an increase in oil refining through fiscal methods, we have now arrived at the idea of mandating oil companies to refine a certain share of oil from extraction.
The stance toward the industry indicates that directive methods will continue to be employed with oil companies, shifting from incentives to penalties. All of this resembles government regulation, despite ongoing claims that we operate in a market. The expert views this step as correct since the fuel market has long been effectively regulated manually, a method that poses significant risks and may ultimately fail.
However, there is another side to the problem. When the tax maneuver was initiated, the regulator's idea was to collect the maximum taxes at the extraction stage, leaving oil producers free to do as they wish with the extracted oil (sell, refine, export). This principle is now being violated.
In Frolov's opinion, the current situation portrays the entire tax maneuver as a significant error that, to some extent, still functions due to numerous "supports": exemptions from MET for certain fields, dampeners, various deductions, etc.
As for forecasts, Stankevich states that the measures taken are yielding results, with price volatility in the exchange and wholesale links decreasing. However, it is premature to speak of a calm period under current military conditions. In the current situation, it is relevant to discuss increasing established oil refining capacities and creating a strategic fuel reserve. Another priority issue is enhancing the level of anti-terrorist protection for fuel and energy complex facilities, including ORPs.
Frolov notes that while demand for gasoline is decreasing, supply is still lagging behind.
Unfortunately, the situation is expected to remain challenging in the coming weeks, with prices staying at high levels.
Tereshkin believes that the risks of further sharp price increases for diesel are low. The diesel market remains in surplus. However, to cool down the gasoline situation, it is necessary to increase its production at ORPs—other measures will not be effective.
Source: RG.RU
